DANRVAN

You need to report the sale of brother's interest in the house in order to file a complete and accurate tax return.

Land goes on part 1.

1245 gains are QBI but not capital gains since they already receive tax preference.

Have researched for clients in the past and basis is zero.

No explanation? Try calling atx support?

Judy, The attachment referred to in Section 3.06 of Notice 2019-7 is specifically for the safe harbor. If you are not relying on the safe harbor the attachment is not needed.

Actually, I don't think intent is a factor in this situation. As long as the rental portion was never used as personal the conversion rule does not apply.

also big companies like Les Schwab Tire have ignored it. The STTT tax is .1 % of wages paid after June 30 2018, how does that compare to the amount shown in box 14?

As preparer you report it as is and let them hash it out.

agree

It depends. If the intent from the beginning was to rent a portion of the building then I would say use cost basis. Otherwise, if the intent was to use it as personal and later decided to rent it out, then the conversion rule of reg 1.168(i)-4 might apply. But in this case where the rental portion was never used for personal purposes I would use cost basis regardless of the appraisal. Reg 1.168(i)-4 only apples when there is a change in use.

Oregon has adopted the Uniform Disposition of Community Property Rights Act which generally recognizes community property status for assets moved from other states unless the title or rights have been altered. If an estate attorney was involve he/she can tell you for sure. When residents of community property states move to Oregon they should consult with an estate attorney to ensure the status is maintained. A community property trust can be setup which allows assets to transfer with in the trust and maintain community property status.

Might be a job for attorney.

File an extension with a reasonable estimate payment if needed. Explain to client return is a mess and do what you can after April 15 as you need to dig up prior returns or transcripts.

To simplify this response, assume the equipment had a five year life using straight line depr. Also assume he bought the equipment at the start of the project which took one year to complete. The "otherwise allowable depreciation" under that assumption would be $5,000 divide by five = $1,000 which is added to the basis of the rental property. The $1,000 is lumped into the cost basis of the building which is depreciated out over 27.5 years once the building is place in service. So in effect, the annual depreciation from the equipment will be $1,000 divided by 27.5 = $36. The remaining basis in the equipment is $5,000 less $1,000 allocated to the building = $4,000. He cannot directly depreciate any of it. All he can do is allocate a portion to the rental basis. Does he also use these tools and equipment in his carpenter work? Maybe works as employee and lost out on misc itemized deduction? $36 a year is not worth messing with.

Do you have a cite to back that up? I think case law would prove otherwise off the top of my head.

It is an unique situation and although it would benefit the client by reporting on E, off the top of my head I can't think of any justification for reporting the grant as rent. My gut instinct was to report it on E since it was directly related to the rental activity, As far as that goes, If the grant had been made to remodel a barn, I would think twice about putting it on Schedule F subject to SE tax. No clear answer that I can see. I don't believe you could make a basis adjustment since there was not a disposition of property.

Show him that the deduction is allowed under sec 162(l)(1) only if the taxpayer has earned income per sec 401(c), as defined as self employment under sec 1402(a) which is subject to self employment tax under sec 1402(b)!!! That is how it works.

per Rev. Rul. 77-282, 1977-2 CB 52, IRC Sec(s). 152, "If the parent had purchased the automobile as a gift for the youth and registered title in the youth's name, the parent thereby would have provided support, and the support so provided would likewise be measured by the fair market value of the automobile and would be included in support for the year of the gift."

Since the grant is directly related to a real estate rental activity, then why not report it on Schedule E and deduct the related grant expenses? As cbslee pointed out, if it involved a farming operation it would go on Schedule F, so why not E (real estate professional or not)?

I believe it is important to verify the balance sheet numbers you will be going forward with when taking on a corp or partnership. Just recently I took on S-corp in which balance sheet was a mess. Had a note receivable that shareholder was unaware of and prior CPA had no documentation of. Also some prior AAA had been co-mingled with capital stock, and there was additional paid in capital that nobody could explain. Accrued payroll liabilities seemed high and it turned out they had made incorrect journal entries so the liability kept growing as they added another layer to it every year. This came from a firm that has a poor history of quality control. Preparer basically said that was the way she found it when turned over by retired partner. Client got over $5,000 of bogus deductions over the years. Back to your post, you raise some good questions but as others have mentioned do not cross the line of handing out legal advice. Also I would not recommend legal zoom over reference to a reputable attorney.

The S-corp stock will go to his estate which will get a stepped up basis for the value of stock on date of death. Basically estate will report a gain from sale of assets by S-corp and offsetting loss from liquidation of S-corp. These two transactions must take place in the same tax year.

Most AMT comes from exclusion items, meaning they are deductions not allowed. On the other hand, deferral items are timing differences like depreciation where you will eventually get the deduction.

Worked great, thank you!!!

Can someone refresh me on how to pdf 7004 and attach for state filing?